Today's Leaders Aren't Prepared For AI - PwC: 'Only 50% Having Right Conversation In The Boardroom'

I write about AI, data, deep tech & self-management in the digital age

Extract from PwC's recent report on changing competition in the 4IR: 'Business model innovation is the most challenging and most complex, but the most rewarding, type of innovation'

PwC 'How the 4IR will change the basis of competition for companies'

‘Companies see how competitive the market is becoming, with barriers to entry collapsing in traditional industries. They know it is all driven by new technology, new business models and new competitors they didn’t see coming.’

This was the prognosis of Mohamed Kande, the Vice Chairman and US Advisory Leader for PwC, in a recent interview with myself that focused on how business leaders should prepare for mass automation and the Fourth Industrial Revolution (4IR). The collision of two worlds: ‘the world of technology, and the world of industry’ will be stark for some, and Kande warns that ‘titans of industry are disappearing because they can’t make the shift.’

Enterprises are slowly waking up to the need to diversify their thinking in the boardroom - ‘100% of companies ’ know they need to have the conversation around how to cope with such radical change. This conversation can’t come soon enough, as Artificial Intelligence (AI) and other technologies are set to automate the majority of work within the next 15 years - but we need to bring everything together in time to ‘shift the current workforce into a new generation of jobs,’ or risk an employment crisis the likes of which has never been seen before.

Navigating a new world

One of the key issues is that executives need to not only understand how groundbreaking technology can benefit their business, but how to react to drastic market changes because of it. Kande states: ‘We need executives who can navigate both worlds [tech and industry] in the same day.’ This mixed understanding of technology and the practical business implications may be lacking in the next generation of workers (the ‘digital natives’) but it is also missing in companies now, and executives need to ‘first understand the problem’ that such disruptive technology will bring, ‘and then gain that diversity of thinking in the boardroom.’

Bringing a new range of thinking into the C-suite is crucial to be able to ‘compete differently, and run their businesses differently’ in a highly automated future. This need to change our way of thinking creates a dilemma for businesses, as a large proportion of workers (and industries) have been trained and built against established conditions. ‘Even the second industrial revolution was about scaling businesses against a set of rules. Here we have to invent a completely new set of rules.’

Kande’s point is sobering and highlights that although executives do need to adapt to digitization, those most at risk are those that have been bound by ‘the rules’ at the most fundamental level. Take driving for example, a profession that currently makes up around 5% of the US workforce (including truck, taxi, delivery and ride-sharing drivers) and will be decimated by automated vehicles. ‘There might not be any other option than to offer them new opportunities, which they may not be able to adapt to’, says Kande. This also applies to workers that have specialized in one set of skills for their entire career, and who will no longer be able to simply acquire new skills to stay in work.

New jobs, a new way of thinking

Despite being aware of the challenges ahead, Kande is optimistic about the future. Whereas new technologies will reduce existing jobs, ‘overall, the number of jobs is not going to decrease, but the type and mix of jobs is going to change. The top four employers in silicon valley today did not even exist twenty years ago - it is pure job creation.’ As opposed to previous industrial revolutions, or even the rise of silicon valley, this time workers will have to think differently and build an ‘awareness of how technology will unleash value’ as part of the wider goals of the business.

With all manual, process-driven and repetitive tasks taken care of by emerging technologies, humans will focus much more on ‘insight-led, high-value activities’, as they will ‘still need someone on the receiving end of the information’ to make decisions and understand human nature and customer needs. But it is the prerogative of companies, not employees, to promote a more adaptable working environment that will prepare us for this change, and a new way of thinking must start at the top.

Thinking ahead

One area that has always championed innovation in both technology and business structures is the startup sector. But a sharp rise in mergers and acquisitions (M&A), as demonstrated in PwC’s recent report, may lead to a situation where automation and the 4IR are driven by venture capitalists, not entrepreneurs that would bring business innovation to the table. ‘This is a good problem to have,’ argues Kande, ‘because the money and the ideas are coming together’ allowing technologies developed in a smaller, more agile environment to properly scale. ‘The task is to scale innovation without stifling the value of that innovation,’ says Kande, some of which is undoubtedly the adaptable way of thinking that will be needed to properly integrate technology into the workplace.

The main challenge for large enterprises will be to ‘think about what the future will be, not scale business based on the rules of today’ - something which will be a rude awakening for many industries. Companies need to encourage those parts of human nature that make us flexible in the face of diversity, and integrate these attributes into new and scalable business models.

Kande says that these key attributes are agility and a deep understanding of how technology affects the business as a whole. I personally believe that the attributes needed to succeed in future are more distinct, and the model we use at our company promotes wisdom, emotional intelligence, initiative, responsibility, and self-development (WEIRD) as a means of bringing about the same kind of mindset that Kande says is needed to ‘reinvent the future.’ Semantics aside, Kande and I agree that change is needed - the question is the timing.

Sequencing: can we change our minds in time?

Can we prepare ourselves for a new wave of jobs in time to compensate those lost to technology? As mentioned previously, Kande is sure that everyone at the forefront of this change is aware of the problem, but only ‘50% are framing the conversation in the right way, forming the right strategy’ to properly work alongside technology. In terms of the number of companies that are actually implementing strategies that will allow employees to be agile, Kande felt it was too small to count.

We also discussed the need for scale on which new and disruptive business models can be created (for example, without the scale of the mobile industry and smartphones, Uber would have had no infrastructure on which to grow thanks to the low cost of data and GPS units in smartphones). Standards are required for scaling, but these can reduce agility and innovation.

While AI and 4IR technologies will disrupt businesses at an unprecedented scale, large enterprises may have some breathing room whilst standards are being created. But without changing their mindset, many executives may find that more nimble competitors have better adjusted to disruptive new business models.

AI will touch every facet of life as no other technology has before, but we have a limited period to change our way of thinking and working and to ‘strike a balance between open innovation and standardization’ so that we can definitively make AI, mass automation and the 4IR work for us.

Charles Towers-Clark is Group CEO of Pod Group, an IoT connectivity & billing software provider. His book ‘The WEIRD CEO’ covers AI & the future of work. Follow him @ctowersclark